If your timetable for selling your business or retiring falls in the next five years, this is a good time to start planning. Maximizing your final proceeds is a 50/50 deal. You control many of the aspects, but the economy and government controls as much. It is our experience that spending a year in preparation of acquisition activity may increase your proceeds by as much as twenty percent. Preparing your personal “financial house” for the taxable event can also save on tax exposure.
For several years potential sellers had been on the sidelines. Today, most distributors have returned to stable and profitable businesses. Seeking their own stability, buyers had had to lower their valuations. Now is the time and here are some reasons you should get started right away.
- Most buyers have returned to profitable/healthy balance sheets
- Banks are loaning large business money at record low rate
- Tax breaks for investing in their businesses may not last much longer
- Positive direction in the economy is eminent
- Lack of good solid businesses for sale in the past few years
- Return of business profitability
- Market trends show a rising multiple on EBITDA
- A bit tired of just weathering the storm
- Desire to move on with your life
What every distributor wants to avoid, is paying outrageous fees. The typical M & A broker will charge five to ten percent for your transaction, after you cover his costs. M & A brokers will market your distributorship to private equity groups and other financial buyers. The motivation for these buyers is to purchase businesses below market value and resell within five years to a strategic buyer. Fees and the right price are important, but even more important to your deal, is confidentiality!
We are ex-Electrical Distributors that can help you avoid costly mistakes. We will work with you through the planning, marketing, and closing of your transaction. We have relationships with more than two dozen strategic acquiring companies that are actively seeking. One of these strategic acquirers may be the right one for you. Contact us and we will work with you until the deal is right for you!